“Aqua America, Inc. (WTR), a regulated water and wastewater utility serving approximately three million people in 14 states, was hands down Income Portfolio’s best-performing utility in 2010, with total returns topping 32%. Its share price has continued to move higher so far in 2011, reflecting not only an improving operational environment but also the utility’s above-average growth, with earnings rising and margins improving. The utility’s long-term strategy of growing aggressively through acquisitions also helped win over investors: during the last 10 years, Aqua America participated in about 200 acquisitions and growth ventures, resulting in average annual customer growth of 5.7% vs. around 1% a year for most utilities. While Aqua America’s P/E is higher than that of most utilities, and despite its below-average yield, we still think the utility is attractively priced, with its higher valuation reflecting its higher growth. And given its near-monopoly status within its markets, the utility should easily maintain above-average growth for some time to come.”
Stephen Leeb, PhD., The Complete Investor, February 2011
